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Ludwig: 'A turn in business may be occurring'

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“I speak with several tire dealers every month. During the last three months, the ratio of dealers reporting weak business to improving business was about 90%/10% in favor of weak comp store volume trends,” says tire industry analyst Saul Ludwig in the latest installment of the "Ludwig Report" in Modern Tire Dealer magazine.

“In July, for the first time in several months, that ratio was about 75%/25% -- still not good -- but a glimmer of evidence that a turn in business may be occurring,” Ludwig says. “One month is certainly not a trend, but still, more dealers are seeing volume improve.

“On the other side of the coin, even those reporting better volume did not get better volume without a cost," Ludwig notes. "Due to intense competition (both from other local dealers and the Internet) most dealers have been unable to fully pass on manufacturer price increases and as such, their gross profit per tire may have declined about $3 vs. what was realized in 2011.

“In light of the recent trends of lower raw material costs, you should be seeing more marketing specials/deals/promotions from your tire suppliers so there is the potential to see your gross profit per tire start to improve during the remaining months of 2012.

For the full Ludwig Report, click here.

Ludwig is a managing director with Northcoast Research Holdings LLC based in Cleveland, Ohio. He concentrates on the tire and chemical industries. Look for the full "Ludwig Report" in each issue of Modern Tire Dealer magazine.

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